Mr. Speaker, it is my pleasure this morning to talk about this income tax amendment bill, Bill C-33, taxation of non-resident trusts, NRTs, as the department likes to call them, and their beneficiaries and of Canadian taxpayers who hold interests in foreign investment entities, or FIEs.

The issue is that Canadians hold a significant portion of their investments abroad. In 2005 Canadians owned $282 billion worth of foreign stocks, bonds and money market instruments. In part, globalization and other factors, such as the need for portfolio diversification, explain this phenomenon.

Some foreign investments made by Canadian residents are, however, thought to be motivated by tax considerations. The use of foreign investment entities and non-resident trusts rather than Canadian-based investment vehicles can result in lower taxes for Canadian residents; an issue that we are dealing with at the finance committee.

The distribution of income from trusts, regardless whether the trust is located in Canada, is subject to Canadian taxes when the beneficiary is a Canadian resident. Furthermore, trusts that are resident in Canada must also pay Canadian taxes on undistributed income. Non-resident trusts, however, are generally not subject to Canadian taxes on their undistributed income.

If a non-resident trust is located in a jurisdiction that applies little or no taxes on undistributed income, the trust could potentially accumulate income and capital on a tax-free basis. As a result, Canadian investors in such non-resident trusts could benefit from deferred taxes as long as their funds are kept in trust.

Distributions made out of the initial capital of a trust, regardless whether the trust is located in Canada, are not subject to taxes in Canada. When a trust is located in a jurisdiction that does not apply taxes to undistributed income, taxes could be avoided altogether by transforming accumulated income into the capital of the trust, which would then be transferred to Canadian investors on a tax-free basis.

As we can see, this bill really deals with a number of issues in terms of Canadians paying their fair share of taxes.

In a manner similar to trusts, investment funds located in Canada are subject to Canadian taxes on income and capital gains accumulated in the fund on a yearly basis. Furthermore, investors in investment funds are subject to taxes on income and capital gains allotted to them.

FIEs, however, are not subject to Canadian taxes. If a foreign investment entity faces little or no taxes in the country of residence, investors in the fund could benefit from deferred taxes on undistributed income and capital gains.

Furthermore, upon the disposition of their interest in the fund, investors in FIEs may be able to transform income into capital gains, which have a 50% inclusion rate in Canada.

It is a tax avoiding system. This bill does its share in terms of trying to end some of those small loopholes that have been brought to our attention, mainly by those who are in the tax preparation business.

The current legislation, which has existed since 1972, the Income Tax Act, has contained provisions that are meant to limit the use of FIEs and NRTs for tax avoidance purposes. Section 94 of the act deals with NRTs, while section 94.1 deals with FIEs.

Section 94 of the Income Tax Act sets out conditions under which a NRT would be subject to Canadian taxes. Generally, two conditions must be met: there must be a Canadian beneficiary and there must be a Canadian contributor.

The beneficiary condition is satisfied if any of the following have a right, directly or indirectly, to any income or capital associated with the NRT: a person resident in Canada, a corporation or trust with which a person resident in Canada is not dealing at arm's length, and/or a controlled foreign affiliate of a person resident in Canada.

The contributor condition is satisfied if the NRT acquired property, directly or indirectly, from a person who meets each of the following requirements: the person is a beneficiary, as I have described before, a person related to that beneficiary or the uncle, aunt, nephew or niece of that beneficiary; the person is resident in Canada at any time during an 18-month period before the end of the NRT relevant taxation year; and finally, in the case of an individual, he or she has resided in Canada for an aggregate period of more than 60 months before the end of the NRT relevant taxation year.

Once these two conditions are met, the manner in which Canadian taxes are applied depends on whether the NRT is a discretionary trust, that is, a trust where the trustee has discretion regarding how much of the trust income or capital is paid to beneficiaries.

In the case of a discretionary trust, the NRT is deemed a resident of Canada for the purpose of part 1 of the Income Tax Act. Its taxable income is generally the total of its taxable income earned in Canada and what its foreign accrual property income, that is, passive income earned by a foreign subsidy, would be if it were a corporation.

In the case of a non-discretionary trust, if the Canadian beneficiary holds at least 10% of the market value of interests in the trust, the trust is deemed to be a corporation that is a controlled foreign affiliate of that beneficiary. The beneficiary is then required to include, in income, his or her pro rata share of the trust's foreign accrual property income. If the Canadian beneficiary holds less than 10% of the market value of all interests in the trust, the beneficiary may be subject to Canadian taxes under the rules governing FIEs.

As we can see, this is rather technical in its nature and has been around for a little while, which I will talk about near the end of my speech. I wanted to make sure everybody understood that this is a technical bill with some needed minor changes to make the system work more appropriately.

According to the Department of Finance, these rules are not fully effective and relatively little income is taxed in Canada. We need to make some changes and that is what this bill does. Several tax haven jurisdictions, which we have been studying in the finance committee, have trust laws that make it relatively easy to disguise the fact that a NRT has a Canadian resident beneficiary. Without a known Canadian beneficiary, current laws to limit the use of NRTs for tax avoidance purposes are difficult to enforce.

I will now discuss foreign investment entities or FIEs. Section 94.1 of the Income Tax Act is intended to prevent taxpayers from using FIEs to defer or eliminate taxes. This section applies if a Canadian taxpayer holds an interest in a foreign entity that derives its value, directly or indirectly, from portfolio investments in specified properties, such as shares or real estate.

Furthermore, for section 94.1 to apply, it must be shown that one of the main reasons for the investment in FIE is to reduce or defer tax liability that would otherwise be incurred if the income accrues directly to the taxpayer. If the conditions specified in section 94.1 are met, a notional annual allocation of income is imputed to the taxpayer and is subject to taxation. The amount of income imputed to the taxpayer is determined by multiplying the cost of the taxpayer's interest in the fund by a prescribed interest rate as calculated in the income tax regulations.

As mentioned in budget 1999, and I will make the point later on that this actually began in 1999 under a previous Liberal government, this provision has rarely been applied because, and this is why we are making changes, Canadian authorities often lack the relevant data and challenges exist with establishing that the acquisition of the interest in the FIE is motivated by tax avoidance purposes.

We had this criteria that one had to be in a tax avoidance which was very difficult under the current act to make that happen. The bill makes some minor changes to the Income Tax Act to assist our bureaucracy, which looks after the tax issues, and make it a little easier for them to calculate and find out whether people are actually avoiding taxes in this method.

Furthermore, when the provision is applied the amount computed to the taxpayer's income is sometimes criticized that it is arbitrary and not necessarily correlated to actual income generated by the FIEs. Therefore, it was hard to determine what that actual income level was.

What are the legislative proposals contained in Bill C-33? Part 1 of Bill C-33 would create a new taxation regime for investors in non-resident trusts, NRTs, and foreign investment entities, FIEs, in order to respond to perceived gaps in the current provisions of the Income Tax Act.

Bill C-33 would make it harder for Canadian resident investors in non-resident trusts and foreign investment entities to avoid or eliminate Canadian taxes on their income from their investments.

The proposed rules are more complex, of course, as the tax system seems to get that way. They are lengthier and more far-reaching than the current rules. The senior levels of the finance department and the tax department said at the committee that these rules were needed for them to be actually effective.

The proposed regime was first introduced in budget 1999. Let us say it is 2007 now and we have the bill in front of us. There has been a number of announcements from 1999 and June 2000, September 2000, August 2001, October 2002, December 2002, October 2003, February 2004 and July 2005. Therefore, the department and the previous government had made a number of announcements but we really did not get it into law. Not everything needed to be in law but a number of the provisions must be to be effective and that is what we are doing today under this bill.

To be frank, we had some limited discussion at committee on this as all the opposition parties were very supportive of moving this forward, which is why Bill C-33 is in front of us today.

For non-resident trusts, in general, Bill C-33 would, for tax purposes, treat non-resident trusts as if they were trusts resident in Canada. Therefore, a contribution, whether a loan or transfer of funds for property, was made to the NRT by an entity resident in Canada or there is an entity that is resident in Canada and is a beneficiary under the NRT. We are trying to make some changes there. If the NRT fails to pay Canadian taxes, each Canadian resident contributor or each resident beneficiary would be jointly liable for the Canadian tax.

What we are saying is that if one meets those two criteria, someone will be paying the tax, either the beneficiary or the one who is contributing to make that happen or they can split that tax burden and pay it that way.

The amount of tax liable for the beneficiary of the trust would, however, be limited to the beneficiary recovery limit and the relief would be available to the contributor whose contribution to the NRT is insignificant. Therefore, there is some flexibility when we discover that one needs to be paying Canadian taxes on these non-residential trusts but who makes the actual payment can be split but it will depend on what that individual's liability is.

On foreign investment entities, the purpose of foreign investment entity rules under Bill C-33 would apply to all Canadian taxpayers except for new immigrants to Canada. I did ask at committee what the words “new residents” to Canada meant and I was told by the officials that this law needed be fair to our new Canadians. People who have come to Canada in the last little while may have trusts and other investments that would apply to these rules and that they would bring with them. The rules that would apply are that they would be tax free and not subject to these new rules under Bill C-33 for a period of five years of their residency. I think that was fair and I am glad t we were able to put that in the bill. That was an issue that I did not have an answer for and they were able to find it. I appreciate that clarification.

Also, partnerships with members resident in Canada would be required to allocate FIE income to those members. Taxpayers would be taxed based on their equity participation, for example, a participating interest or a particular interest in a trust or other specified type of entity, in a FIE, on their investment in an entity if the investment return from the entity tracks the investment return on certain properties or on their interest in certain foreign insurance policies. We are basically looking at what level of participation individuals have in these FIEs and that would determine their liability.

However, taxpayers would not be taxed on their participation if an “exempt interest”. An exempt interest of a taxpayer in a non-resident entity would generally include, but not be limited to, an interest in: a non-resident entity that is a controlled foreign affiliate of the taxpayer or a partnership; certain property held by financial institutions; and a widely held FIE listed on a prescribed foreign stock exchange if it is reasonable to conclude that the taxpayer had no tax avoidance motives. We must remind ourselves that that is what we are trying to overcome. It is tax avoidance and if a taxpayer can show that was not the purpose of an investment. these rules would not apply.

A FIE that is governed, formed and organized under the laws of the country with which Canada has entered into a tax treaty, and there are some other issues with that. We have tax treaties with a number of countries around the world. We also have tax treaties with the U.S. It would be up to the taxpayer to show that it is the case and that it was not a tax avoidance motive again, and that is the issue.

In most circumstances, and in particular when the taxpayer has insufficient information to use other options, the taxable income of the taxpayer in respect of a participating interest in a FIE would be determined annually by multiplying the cost value of the taxpayer's interest by a prescribed interest rate. If the taxpayer has sufficient information to company, he or she would be able to elect to compute taxable income in respect of a participating interest in a FIE based on the annual movement in the fair market value of that interest. Provided that conditions are met, taxpayers would also be able to elect to treat a non-resident entity as a controlled foreign affiliate, in which case they would be required to include their annual share of the non-resident entity's income on their taxable income for that year.

I know that was exciting for everybody in the House today and those watching at home. This is a very technical bill and it is fairly large. It has lots of wording changes and so on but, in a nutshell, it includes changes to non-residents trusts and foreign investment entities, as well to be consistent with the Income Tax Act. All we are looking for and all we have been dealing with, not just with this part but with other studies that the finance committee is doing, is fairness in the tax system in terms of making sure that those who are required to pay Canadian taxes are paying their fair share of taxes.

I am very supportive of the other opposition parties on this particular tax issue. The changes to NRTs and FIEs would tighten the tax rules around tax havens and respond directly to concerns raised by the Auditor General. We did not come out with this on our own. The Auditor General in her reports indicated that this was an area that needed to be looked at and we did. The previous Liberal government made attempts to get it here but we are actually getting it done. We are at third reading, which is excellent. What needed to become law will become law. We will be tightening the offshore tax havens as viewed positively by taxpayers and the Auditor General. Some stakeholders will likely be not pleased because they have money in these tools but it is important that every taxpayer pays his or her fair share.

These proposals have been released for over a year. We did make some new changes. Obviously, as time passes we find new issues, and the response has been relatively positive. Those who are intimately familiar with this are normally tax lawyers and tax accountants who deal with individuals who have this and they have indicated to us in terms of what needed to be tightened up and what did not and how to clarify the system. The bill is quite technical, but it is an important piece of legislation.

Mr. Speaker, I would like to thank my colleague for his energetic and exciting presentation on the thrilling subject before us today.

This subject was discussed at length during meetings of the Standing Committee on Finance. This is a very technical, long and complex bill. We are all in agreement about this bill and about something else that happened in the Standing Committee on Finance, which was the series of very complex amendments to a complex bill that were introduced at the last minute. In order to do their job well, the members of the Standing Committee on Finance decided to wait a while before completing their review of this bill. They wanted to take the time to examine the series of amendments introduced by the government in greater detail.

I would like my colleague, who is a member of the governing party, to tell me if he is now quite sure that this bill needs no further amendment and that it is now complete. Now that it is about to be passed, have they made up their minds about all of the issues surrounding this bill?

Mr. Speaker, I thank my colleague who sits on the finance committee representing the Bloc party and who does an absolutely fabulous job. I do not always agree with the member but he represents his constituency well by actively participating in all the meetings.

On the actual amendments he asked about, he is right. A number of amendments were presented at committee, and rightly so. Committee members told the finance staff that we wanted a different method. We were sending a message that even though these were technical amendments, that they were important to all Canadians and that it was important as committee members that we understood that. The finance staff did their homework and put this together.

I can stand here and say that, based on the input from the committee members and the staff at the finance department, I think this is the end of the amendments on this. I do not believe there are any more. However, I do want to caution that as time changes and new financial tools are developed, and in this case around the world, that there may be changes in the future that will need to be addressed based on the creativity of the finance markets to find other ways to avoid tax.

This bill is really about trying to fill some gaps and loopholes, and I do not like using that word, but opportunities that people have found through the tax system that allow them to avoid tax. These amendments go directly to that. We on the government benches are not planning any further amendments to the bill at this time but I cannot say that will never happen as the times change and new opportunities present themselves to investors. In my view, with these new opportunities, the tax department would need to find ways to ensure we are not taken advantage of.

Mr. Speaker, the member uses the phraseology “paying a fair share of taxes”. I think the member is quite right when he says that the marketplace is very creative. We tend to lag behind in being able to respond quickly to marketplace changes.

The member is probably aware of one of these things we have seen, although I am not sure if Bill C-33 touches on it. Quite honestly, I have not examined the bill in its fullness, but the member is aware that as a consequence of the change in government policy with regard to the taxation of income trusts, there have been, I understand, about 10 income trusts which have been purchased by foreign private equity. As a consequence, they have been able to structure their affairs so that they no longer pay Canadian taxes.

In fact, it is estimated that about $6 billion of revenue that the Government of Canada formerly had collected from them will be lost each and every year because of this structuring of foreign private equity investors. Is the member satisfied that we have been able to identify and respond to some of the emerging financial techniques that have come forward, such as stapling of debt and equity, et cetera?

I believe this poses a serious threat to the taxation revenue of Canada. It may be fair, but it is not really in the best interests of Canada to lose $6 billion of revenue.

Mr. Speaker, the member from Mississauga said it might be fair but it is not in the best interests of Canada. I think fairness is in the best interests of Canadians. I also want to let him know that this bill does not affect the area he was talking about.

However, there is one interesting thing. I am not going to debate the decision that was taken, as that is not what this bill is about. I received a report from a financial adviser in my area. He is not my financial adviser, but he sent me something. The member is right when he says that a number of income trusts have been in play. I think this adviser's report said that about 16 income trusts have been in play. I cannot remember the numbers, but the vast majority of them that have been sold, he said, perhaps 10 or 12 of them, were as much as 30% above their market value as of October 31. The investors in these income trusts are doing quite well in terms of the value of those sold items. There are two that were sold and are under their October 31 value.

That is the marketplace. That was the whole idea of the change we are trying to make in regard to fairness in the tax system for all corporations, whether it is an income trust structure or a corporate structure. That is what our bill was about. It has now passed this House and we are patiently waiting for the Senate to approve it so we can move ahead on these issues.

I know that on this particular topic the leader of the Liberal Party has said that he expects his Liberal Senate counterparts to pass the bill this bill that was passed by the House. I am not sure why the Senate has not yet approved the bill or where it is in the Senate process. I look forward to the support of the member and his leader to make sure the Liberals in the Senate move forward on the bill.

Mr. Speaker, it is my honour to rise and ask the member for Burlington a question.

The member for Mississauga South has raised the point that some of these trusts are being bought up and may not pay tax, which flies in the face of our tax fairness agenda. I want to assure the member that while the former Liberal government did not feel that tax fairness was important, our Conservative government does. We are going to move to close those loopholes because we think everybody should pay their fair share of taxes so we can broadly reduce taxes right across the spectrum.

I believe that families, seniors, small businesses and businesses in general all pay too much tax. The only way we can ensure tax fairness is to broadly bring in taxes that are fair to everyone. We want to reduce taxes. I want to assure the member for Mississauga South that while he picked winners and losers in the tax system we will not.

Does the member for Burlington think the constituents in his riding stand behind tax fairness? Do they think everybody should pay their fair share? This will allow us to reduce the tax burden. Or do they prefer the Liberals' program, which was that some people, their friends, paid no tax, and other people paid the burden?

Mr. Speaker, that is an excellent question from my colleague, the member for Peterborough, who does an absolutely fabulous job on the finance committee. He is always well prepared and asks very in-depth questions of the people who come before us. I appreciate all the work he does not only on behalf of the people of Peterborough but all Canadians.

In my riding, I hear a lot about taxes, tax fairness and why corporations and other individuals are not paying their fair share. As a government, it is our policy, our vision and our philosophy that everybody in this country, whether it is as a corporate entity or an individual, should be paying their fair share of taxes.

Mr. Speaker, I am pleased to congratulate my finance committee colleague, the member for Burlington, for a truly scintillating discourse on this exciting subject.

It is an important subject. It speaks to tax fairness, to making sure that all people pay their fair share of taxes so that others will not have to pay more.

We on this side are very pleased to support the bill because it is, after all, a Liberal bill. It is a good illustration of an intelligent and competent approach to tax fairness. Indeed, it was tabled in the House by the previous government, but sadly did not pass in time so now it is back again. We support this Liberal approach to tax fairness, embodying as it does both intelligence and competence.

If I have time toward the end of my comments, I might offer a contrast between this approach to tax fairness versus the Conservatives' own approach, which is not only not intelligent and competent but unintelligent and incompetent. I refer to their disastrous temporary incursion into the area of interest deductibility. It is a good case study of the general proposition that when it comes to economic management, the Liberals are competent, as reflected in this bill, and the Conservatives are incompetent, as reflected in their disastrous experience with interest deductibility.

Beginning with the bill, what it essentially does, notwithstanding that it is technical, as my colleague said at least 12 times, is tighten up the rules when a Canadian uses a foreign investment entity or a trust with the intent of avoiding taxes altogether. The bill ensures that any income earned through these investment vehicles will be taxed as though that income were earned in Canada.

The essence of the idea is to make sure that it is not advantageous from a tax point of view for a Canadian to invest outside Canada and take advantage of secrecy provisions in tax havens that prevent the Canada Revenue Agency from finding out what is going on. It is an attempt, and I believe it will be a largely successful attempt, to clamp down on what is at best aggressive tax planning or at worst outright tax evasion.

How do we do this? The government is in a permanent struggle with tax lawyers and the private sector, which can pay a lot of money to get the best tax advice to avoid taxes, whether legally or illegally, so how does the government counteract that?

The short answer is that we have to give the Canada Revenue Agency the tools with which it can go after these people and stay ahead of the tax game. When we were in government, we did this by putting $30 million a year of extra money into the CRA budget, in the budget of 2005, to strengthen its capacity to go after those who would indulge in aggressive tax planning or tax evasion.

I remember well, because I was the revenue minister at the time, that we opened 11 centres of expertise across the country, and I visited a number of them, where we had expert lawyers, accountants and others who had deep knowledge in these areas and would go after those who would indulge in this aggressive tax planning.

I recall that these entities were having some success in going after such individuals or entities. The work they did internationally and collaboratively with other countries was also very important, because in these areas it is frequently very difficult to act alone. However, if the G-8 or the OECD act together, then one can be much more effective. These entities also worked extensively with the OECD and with the Pacific Association of Tax Administrators, the Joint International Tax Shelter Information Centre and other international organizations of this kind.

That is what I mean by intelligent pursuit of tax fairness, an intelligent and effective way in which we go after those who would abuse the system, both in terms of the legislation before the House today and in the setting up these 11 centres of expertise where are our own Canadian experts would go after those who would abuse the system.

We on this side of the House have nothing to apologize for in terms of the government. We put $30 million into these centres of expertise and I believe the current government put $20 million into them. Therefore, if only by that measure, the Liberal government has been at least as aggressive as the Conservative government in going after tax evaders.

Now I will say a few words about the other way of going after tax fairness, a way that is both unintelligent and incompetent as opposed to the sensible way, which I have just described. Members of the House will recall that in the budget of 2007 the minister said that, starting from a certain date, companies would no longer be able to deduct interest on debt used to finance foreign acquisitions. He said that it would bring in revenue of $40 million a year. The experts said no, that it may be $2 billion or $3 billion. He was totally out of his depth and did not know what he was doing.

The whole financial community and community of experts came down on top of him. The one good thing he did was withdrew it. He flip-flopped and removed that item from the budget. However, there were two things he did at the same time, which were not good. A sensible approach would have been to simply say that he was sorry he put that in, that he made a mistake, and refer the whole matter to a committee of experts, because these are very technical matters. The Liberal leader had proposed that some weeks before the minister did his flip-flop.

However, he did two things that reflect poorly on the government. First, he claimed that only he, the Minister of Finance, had read the budget correctly and that all those tax experts and analysts out there, whose job it is to read budgets, had read it wrong, that he had never said interest deductibility would be eliminated. He said only that he would go after double-dipping and tax havens.

First, that is wrong if members read the budget. Second, it was not very smart because he alienated the whole tax expert world, which does not really like it when its professional intelligence is questioned by a minister who claims that only he knows how to read the budget.

More important, having incompetently tried to go after tax havens with the interest deductibility measure in the first place, he made an incompetent retreat. All the experts tell us that the real abuses in this area have to do with debt dumping. They do not have to do with double-dipping. Yet the minister, in his unseemly retreat, focused exclusively on double-dipping, which is the irrelevant part of things, and not on debt dumping which is the critical one.

I have heard at least six or seven witnesses and all but one have said that it is exclusively debt dumping that is important. One said that both were important. Therefore, the expert community is in agreement that the problem is the debt dumping.

What debt dumping means is a foreign subsidiary comes into Canada, borrows huge amounts of money, reduces or eliminates its Canadian tax liability by deducting the interest on that debt and then invests that money in a third country. There is abuse there.

Something called our thin capitalization rules could be tightened up to reduce that abuse to achieve more tax fairness. That is what the minister should have done. That is what a sensible, rational person would have done, but he loves the term double-dipping because it has a kind of unethical flavour to it, so he goes after that even though it is not relevant.

The double-dipping, and here again I am quoting experts, means a Canadian company would only be able to deduct the interest once, so the Canadian company will deduct the interest in Canada. What will now be not allowed is deductions in third countries like the U.K., or Europe, or the United States. It is the deductions in those third countries that the minister is prohibiting.

What would be the effect of that? The effect on Canadian revenue would be zero. It would not help any other Canadian pay less tax. It will not contribute to tax fairness because it will not have any effect at all on Canadian tax revenue.

What it will do is enrich the treasuries of the United Kingdom, or a European country, or the United States. There would be less money going to the Canadian companies, making them less competitive. It would be a transfer of their money to the U.K. or the U.S. government. That makes no sense. It is yet another indicator that the minister is well and truly out of his depth.

To conclude, our party is very pleased to support the legislation put forward by the government, but which is Liberal legislation and which represents an intelligent, reasonable and effective way to attack tax abuses and to ensure tax fairness, in sharp contrast to the Conservative measures when the Conservatives have not had Liberal measures to fall back on. When they have struck out on their own, they have ended up doing so in an extraordinarily ineffective and incompetent way, as the whole country has seen from this example of interest deductibility.

Mr. Speaker, I appreciate the opportunity to respond, not so much to the issue at hand because I, too, support the initiatives of my hon. colleague. I think it is a worthy thing. However, I want to ask the member two questions, but I will have to lead up to them.

The school boards in Quebec and Ontario sued the Liberal government to get their GST money back on the charges of transporting little kids to and from school. The courts agreed and awarded the school boards money. However, the Liberal government decided to back up and stall the delivery of that cash until it could unilaterally, unethically and, in my opinion, illegally retroactively change the tax laws, thereby denying school boards their GST refunds. Those members voted against the government giving that money rightfully back to the school boards. Even members voted no for school boards in their own ridings.

First, is the hon. member in favour of ignoring court orders when it is convenient? Second, is this member in favour of retroactively changing tax laws for Canadians?

Imagine if a government said, “We're going to change the tax law to 40%, retroactive to 1990. You owe us a quarter of million”. We cannot do that. However, that member voted to do exactly that.

Mr. Speaker, I do not recall that this item was reversed in the last budget. Canada's new government is not that new any more. It has been in office for 18 months. Does it take more than 18 months to get this little job done?

If the member over there is so up in arms about how terrible this is, why has the new government not acted in the 18 months in which it has been in office?

Mr. Speaker, I appreciate the member's speech and I appreciate his support of the government bill, Bill C-33.

The member went on to talk about debt dumping, which is an important issue and we have discussed it at finance committee. However, I do not understand it. Debt dumping did not just start in the last 18 months.

Why did the Liberal government completely ignore the fact that people were trying to take advantage of the Canadian tax system? If debt dumping is so important to the Liberals now, why did it take them 13 years to do absolutely nothing about it? They had to wait until they were on the other side of the benches to wake up and find out there was debt dumping in the country and we had to make changes? What is wrong over there?

Mr. Speaker, the finance minister of Canada's new government has had some 18 months to learn about debt dumping. He has learned zero because he went after the wrong target. He did not target debt dumping. One would think a finance minister who goes to work everyday for 18 months is not so new any more and he might have learned something by now.

Instead of going after double-dipping, which is irrelevant or counterproductive, as the member has implicitly admitted, maybe he should have a meeting with the finance minister and teach him the basics about debt dumping versus double-dipping.

The thin capitalization rules have been reviewed over the years. I think the time has come for further review and study of this issue by experts as to what additional actions could do to limit revenue losses arising from debt dumping. It has been reviewed before over the years. I believe the time has come for another review.

The minister does not even understand what debt dumping is. He did not even mention it, so I do not know why the member should get all lathered up when his own minister does not get it.

Mr. Speaker, I feel like I am going to have to play the part of Columbo on this question because we have to do some investigation on the out of his depth analogy.

I find it really quite remarkable that the member for Markham—Unionville stands and says it is “debt dumping, stupid”. He is right, it is debt dumping. Quite frankly, I do not understand why the Liberals took so long to deal with it. I have many quotes here.

We are going to determine who exactly is out of their depth, and I want to ask a question about the Liberal plan on foreign investment.

The Financial Post said, “Rarely has a political news release contained as many bad economic ideas as the Liberals compacted into their call yesterday for a national frenzy over foreign investment”. The Edmonton Journal said, “It was a lame attempt to exploit public angst about foreign takeovers”. The National Post said, “typical case of politicians meddling in a world of which they know little”. I think it is speaking perhaps of the Liberal Party and that it does not know much about this.

When he talked about people being out of their depth, who is he really talking about? I think he is talking about the Leader of the Opposition, because clearly this is bad policy. Clearly, it is bad for Canadians and it will lead to less overall investment and less overall for Canadians. That is the Liberal plan.

I would love to know why the member stands in the House all the time and says that we do not understand. According to experts across the country, it is the Liberal Party that does not understand. The only problem is it is so far beyond its understanding that it does not even know it does not get it.

I will try to get to the bottom of this. Why did this bill sit around since 1999, and it is now 2007, and it took the Conservative Party to bring it to the House for a vote to make it law? Why did the Liberals not deal with it? Were they out of their depth? Did it matter? They did not get it done and I would love to understand why.

Mr. Speaker, let me focus on foreign investment. The member quotes Terence Corcoran, whereas on our side we have Gwyn Morgan. I know Gwyn Morgan is the Prime Minister's favourite business leader. I know the Prime Minister is a great fan of taking Liberal programs, watering them down and re-labelling them with new names. He has done that on the environment and many other things.

It is very important for the country that we review our Investment Canada Act, which has not been reviewed for 22 years. It is not for purposes of protectionism at all. It is to see whether the tools are best suited for the 21st century.

The hon. member over there can go on quoting Terence Corcoran, a nice gentleman who is very right-wing. I would prefer to go with the Prime Minister's favourite business leader, Gwyn Morgan, who himself has come out very emphatically on the need for a quick review. The government is putting its head in the sand like an ostrich and doing virtually nothing on this file, when Canadians want action and a Gwyn Morgan plan, let us call it that, to review the Investment Canada Act.